‘Reliance siphoned off Rs 285 cr from airport Metro to subsidiaries’
20 Feb 2013 6:28 AM IST
In another damning indictment of Reliance Infrastructure Limited, the draft report by the Comptroller and Auditor General (CAG) on Airport Metro Express Line sent to the ministry of urban development claims ‘Rs 285.43 crore were released from the Escrow Account by the concessionaire to various subsidiaries of M/s Reliance Infra Limited. And the DAMEPL had not given any related party disclosure in respect of these transactions in their accounts during the years 2009-10 to 2011-2012, which was in violation of Accounting Standard 18— ‘Related Party Disclosures’ of Institute of Chartered Acoountants of India (ICAI).’
DAMEPL is a Special Purpose Vehicle (SPV) to develop, operate and maintain the Delhi Airport Express Line (DAMEL). The Delhi Airport Express shareholders are Reliance Infrastructure Limited and Construccionesy Auxiliar de Ferrocarriles, SA (CAF) of Spain with 95 per cent and five per cent stake respectively.
The report says, ‘Delhi Metro had decided to appoint a special auditor to thoroughly review all the investments and all transactions under the escrow account and had also served a default notice to the Concessionaire in this regard. Thus the management in its reply accepted the fact and also decided to review these transactions thoroughly through a special auditor. However, the management failed to monitor escrow account transactions timely, which reveals inaction on the part of Delhi Metro.’
An escrow account refers to an arrangement where assets or revenue streams are held in the safe custody of a bank as safety against a situation when a contract isn’t fulfilled. The escrow arrangement ensures that obligations between parties are met with and transactions are operated in terms of the underlying agreement.
DAMEPL is a Special Purpose Vehicle (SPV) to develop, operate and maintain the Delhi Airport Express Line (DAMEL). The Delhi Airport Express shareholders are Reliance Infrastructure Limited and Construccionesy Auxiliar de Ferrocarriles, SA (CAF) of Spain with 95 per cent and five per cent stake respectively.
The report says, ‘Delhi Metro had decided to appoint a special auditor to thoroughly review all the investments and all transactions under the escrow account and had also served a default notice to the Concessionaire in this regard. Thus the management in its reply accepted the fact and also decided to review these transactions thoroughly through a special auditor. However, the management failed to monitor escrow account transactions timely, which reveals inaction on the part of Delhi Metro.’
An escrow account refers to an arrangement where assets or revenue streams are held in the safe custody of a bank as safety against a situation when a contract isn’t fulfilled. The escrow arrangement ensures that obligations between parties are met with and transactions are operated in terms of the underlying agreement.
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